The Power of FTX
Through credit enhancement, we improve credit worthiness. The lender is reassured that the borrower will honor the obligation via additional collateral, insurance, and a third-party guarantor. Credit enhancement reduces credit/default risk of a debt, thereby increasing the overall credit rating and lowering interest rates simultaneously.
The four cascading levels of credit enhancements provide unprecedented risk reduction towards unsecured loans:
- Over-collateralization acting as additional security; and if it fails to cover all losses arising from the same borrower,
- Third-party guarantors take care of the overflow losses from the above for the selected loans; and if it still fails,
- Cross-collateralization pool provides additional insurance; and if it still fails,
- Five (5)% of all FTX Tokens has been reserved to cover any losses incurred by lenders.
Please see the diagrams below to see how we protect our lenders in various scenarios:
Scenario #1: No guarantor
Since the over-collateralization coverage is one-tenth of the loan, it is capable of covering one out of ten bad loans from the same borrower.
FintruX receives FTX tokens as matching fee from both borrowers and lenders, generating demand for FTX.
FintruX + Guarantor Protection
Scenario #2: Protected by guarantor
The local guarantor is responsible for the overflow losses arising from delinquencies and defaults of loans under their protection.
Guarantors receive incentive pay in FTX Tokens, further generating demand for FTX.
Scenario #3: Collateralization pools goes up 10 times in value over the term of the loan
In this case even if all the loans are defaulted, this cross-collateralization pool can cover all default losses of all loans. The risk for the lenders is neutralized.
This can happen in many ways including:
- Wise investment in short term-deposits matching the maturity of each obligations; and
- Continuous injection of over-collateralization from new loans; and
Scenario #4: Guarantors fail to deliver their promises AND there are too many bad loans
In this case, 5% of all FTX Tokens has been reserved to cover these overflow losses when all previous cascading credit enhancers fail unexpectedly.
This is the ultimate protection.
About us: FintruX Network is the global P2P lending ecosystem powered by Ethereum and no-code development. FintruX facilitates marketplace lending in a true peer-to-peer network to ease the cash-flow issues of SMEs that typically face challenges getting loan financing, such as startup companies.